Nuclear power in Switzerland and the Leibstadt plant

Leibstadt Nuclear Power Plant

As of 2007, the last year for which complete and reliable data is available, approximately fourteen percent of the world's electricity was produced in nuclear power plants. Though they are still controversial, given fears of reactor meltdowns, general hazards of radioactivity, and the issue of the disposal of nuclear waste, interest in nuclear power is surging again as concerns are mounting about the use of fossil fuels -- particularly coal -- in the production of energy. Strangely, nuclear power might be making a shift from the dark and dangerous new technology that it was when it first emerged to the cleaner alternative that promises a more energy-rich and pollutant-free tomorrow. Even the older plants that have been online for decades release less pollutants into the environment than do electricity plants that still operate by burning huge amounts of coal.

In Switzerland, the use of coal-based power plants and other traditional power plants has already been largely phased out, with over ninety-five percent of the country's electrical power being produced in cleaner plants. Over half of this power comes from hydroelectric plants, but a very significant forty percent of this energy comes from the country's four nuclear power plants, which contain a total of five reactors. Switzerland did experience one partial core meltdown in a plant in 1969; the site was decontaminated and decommissioned immediately thereafter and the incident was well contained. Switzerland's other four nuclear power plants, one built in the 1960s, two in the 70s, and the last in 1984, have all remained in safe and consistent operation since first coming online.

KKL Leibstadt

The municipality of Leibstadt, wherein the Leibstadt nuclear power plant is located, is in the Swiss canton of Aargau. The industrial city is at one of the northernmost points of Switzerland, almost on the southern border with Germany (though technically Bernau, another Swiss city, lies between Leibstadt and the border, the two cities form one mid-sized industrial sprawl). Built by General Electric, the design is fairly typical of nuclear power plants, with a boiling water reactor and a large (single) cooling tower. This cooling tower measure one hundred and forty-four meters in height (over one-and-a-half football fields, to put that in perspective) and has a diameter of one-hundred and twenty meters at the base.

Built by General Electric, the planning of the Leibstadt (KKL) project began in 1964, twenty years before the plant came online. These original plans were for a six hundred megawatt reactor that would be cooled by the Aare river, the lower course of which runs through the city and canton. In 1971, river cooling was prohibited by the Swiss parliament, forcing a change in design and delay in construction; further planning changes increased the output of the plant from six hundred to nine hundred megawatts. Construction for the project did not actually begin until 1973, nine years after planning had begun, and would continue for eleven years. One of the reasons that completion of the poject was delayed so ong were the new safety regulations mandated in 1979 following the Three Mile Island accident near Harrisburg in the United States, which pushed back the project several years.

The ownership of the plant is somewhat complex, as it is part of a national utility but also semi-independently operated. The official owner of the Leibstadt (KKL) is Leibstadt AG, which is itself composed of six separate Swiss energy companies, each with different percentages of shares in the plant, its product, and its maintenance. Aare Tessin (Atel) owns twenty-seven percent of the plant, the northeast Swiss power stations business group (NOK) owns twenty-three percent, central Swiss power stations own fourteen percent, the company EGL owns sixteen percent, and the power station companies of Berni and Aargaur own ten and five percent of Leibstadt (KKL), respectively. Currently, the plant is managed by NOK due to the formation of the ownership group, which has shifted somewhat since the projects inception and completion.

The construction of the plant required a significant investment, with the projected costs of two billion Swiss francs for construction more than doubling over the eleven-year construction period to well over five billion francs. Still, this investment has almost certainly paid off for the original investors and current owners of the plant given ts continued operation and general financial strength. Once coming online, the continued operation of a nuclear power plant is relatively inexpensive (when compared to some other power plant types), and the price of energy being determined by the cost of production (as demand remains fairly constant over time, actually showing a rising trend from year to year) allows the plant to be profitable. It is able to adjust production capacity as warranted by the market, and has always consistently produced a sufficinet amount of electricity.

Business Strategy Analysis

Despite the cleaner immediate impact of nuclear power plants when compared to coal-fired plants, there are definite concerns regarding the environmental hazards of nuclear waste disposal. This, combined with the fear of reactor meltdowns and other accidents that could cause radioactive contamination to large areas surrounding the plant (in worst-case scenarios), is the major drive behind the political anti-nuclear movement. Leibstatd (KKL) has been in operation without a single accident for twenty-five years, however, and Switzerland's other nuclear power plants have similar track records. In the face of the threat of global warming and other concerns regarding carbon emissions, this political pressure is likely to see a drop in its numbers and in the strength and fervor of its advocacy.

The major strength of Leibstadt (KKL) is its place of prominence in the Swiss energy system. As a provider of fifteen percent of the country's energy, it holds a significant bargaining position within the market. At the same time, it is subject to intense regulation regarding both its pricing and its operations, and the backlash of public opinion if it exercises what latitude it does have in these areas, which is a definite weakness in the company's position. In 2005, Switzerland imported more electricity than it exported for the first time, which provides an opportunity for the plant to increase its production to nearer its capacity in an effort to export more energy, especially in the summer when domestic consumption is lowest. Political pressure is the only real threat the company faces, and as stated this is minimal.

Given the position of the company within the Swiss and Western European energy markets, as well as the general position of nuclear energy within the current push towards green energy, a slight expansion -- or at least the increase of production -- would be the best current strategy for the company. As a partial provider of a public service, whether or not it is publicly owned, there is not a great deal that Leibstadt can do in the way of direct competition or expansion. Increasing production, however, can make the plant more efficient and able to offer its energy slightly cheaper perhaps, expanding domestic growth slightly and export potential more significantly. This could also help counter some of the public pressure on the nuclear energy industry in Switzerland, as well as shoring up the strength the company already has in its market share and production capabilities.

Conclusion

Visiting the Leibstadt nuclear power plant facility, though very interesting and new, does not reveal a great deal about the company's financial or market situation, its business strategy, or even its operation to the untrained observer. The sheer size of the facility and its grounds is intimidating, as is the fact there is a large amount of fissionable material near enough to cause major damage to one's person, but overall the sense of supreme industrial efficiency is the most palpable impression given by a visit to this nuclear plant. It is also this which inspires a sound faith in the continued profitability of this enterprise.